Short Summary:

Quebec’s system of taxation and social transfers, relative to Ontario’s, generates large marginal effective tax rates (METR) and participation tax rates (PTR) on labor income. This is largely due to the steep claw back of transfers following increases in Quebecers’ labor income. Quebec’s METRs are particularly high and variable between $0 and $50,000. The METR of two-parent families with income around $20,000 even exceeds 125%; 40% of two-parent families face a METR that exceeds 50%. A better integration of the tax and transfer systems would result in greater transparency, better distributional effects and greater administrative and economic efficiency.

Publication Authors: Arnaud Blancquaert, Nicholas-James Clavet, Jean-Yves Duclos, Bernard Fortin et Steeve Marchand
Number: 15-09
Year: 2015